OAO Rosneft Chief Executive Igor Sechin bought his first shares in the state-run company, now the world’s largest traded crude producer by output, that he has led for almost 10 years.
Sechin, who heads an energy commission formed by President Vladimir Putin last year, bought shares worth 0.0075 percent of the company’s charter capital, according to a regulatory filing by the Moscow-based company today, which also listed six other managers that bought stock. The stake is worth about $5.6 million, based on Rosneft shares, which rose 0.82 percent to 236.41 rubles at 2:22 p.m. in Moscow today.
“Linking even part of management remuneration to the share price performance is a positive step for minority shareholders,” said Chris Weafer, a senior partner at Moscow-based Macro Advisory. “It is steps like this which will eventually cut the big discount at which Russian stocks, on average, trade relative to peers.”
Sechin served in Putin’s Presidential Administration from 2000 to 2008. During that time he led Rosneft, as board chairman from 2004 to 2011, to become Russia’s largest oil producer, buying assets of bankrupt Yukos Oil Co. Sechin then became chief executive in 2012 and oversaw the $55 billion TNK-BP acquisition, vaulting it into the top spot in oil production among traded companies.
Rosneft still lags behind peers in valuation with share prices at 5.97 times earnings, compared with Exxon Mobil Corp. whose share price is 11.22 times earnings or Chevron Corp. (CVX:US) where the multiple is 9.7, according to data compiled by Bloomberg.
Management purchases of stock “exemplifies confidence in the company’s further progress,” while providing incentive to improve the company’s performance, according to the statement.
“Sechin said many times that he finds Rosneft undervalued by the market, so his step fits into this logic,” said Alexander Kornilov, a Moscow-based oil and gas analyst at Alfa Bank. “Other Rosneft top managers also bought the stock -- a good indication in general.”
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